JAKARTA: Malaysian palm oil futures extended losses on Monday for a second day as the uncertainty over exports from top producer Indonesia dampened market sentiment.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange fell 1.53% to 6,256 ringgit ($1,432.23) per tonne by midday break.
Indonesia’s trade ministry has received a number of palm oil export permit requests and the permits could be issued within the day, a senior ministry official Veri Anggriono told Reuters on Monday.
Last week, the country had allowed the resumption of crude palm oil exports and its derivatives, but put in place a policy of mandatory sales to the local market at a certain price level to secure supply of the vegetable oil at home.
Palm oil may rise into 6,713-6,731 ringgit range
Indonesia plans to initially allocate 1 million tonnes of palm oil exports after the government lifts the export ban.
The country typically exports around 3 million tonnes of palm oil every month.
“This allocation comes with lots of restrictions, which the market sees as slow-moving, but will ease current shortage none the less,” a Kuala Lumpur-based trader said.
Meanwhile, expectations of soft palm oil output from Malaysia peninsula were cushioning the drop in the benchmark contract price, the trader added.
On the Dalian exchange, its most-active soyoil contract traded 0.27% lower, while its palm oil contract rose 2.07%. Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Palm oil benchmark contract may seek a support around 6,220 ringgit per tonne, as suggested by a retracement analysis, Reuters technical analyst Wang Tao said.